September annual inflation eases to eight-month low

* Annual inflation at 6.4%, eases for second month

* Improved food, vegetable supply helps ease inflation

* CB expects annual inflation at 6% by December

COLOMBO (Reuters): Sri Lanka’s annual inflation slowed to a lower-than-expected 6.4% in September from a year earlier, down from 7% in August on a new consumer price index, Government data showed on Friday.

Annual inflation eased for a second month to its lowest levels since January mainly due to decelerated price hikes in food and vegetables, data showed.

“This is well below expectations,” said TKS Securities’ Head of Research Danushka Samarasinghe.



“Improved food supply, especially vegetables, have helped the inflation to ease.”

The Central Bank has estimated annual inflation to stabilise around six per cent by the end of the year and it has kept monetary policy rates at six-year lows for the seventh straight month in August on hopes of easing inflation.

Annual average inflation, measured on a 12-month moving average, accelerated to 7.2 per cent this month, highest in the new index, from 7.1 per cent in August. A Reuters poll by 14 analysts had expected annual inflation to cool 6.9 per cent and the annual average to hit 7.2 per cent.

The Department of Census and Statistics in June introduced the new index based on a 2006/2007 survey, replacing an earlier one that had 2002 as a base year.